1. You want to retire in 35 years. You want to have an income of $50,000 per year when you retire. If you think you will live for 20 years after retiring, and if you currently make $50,000 per year, and if the rate you earn on your investments is 10%, what fraction of your income do you need to save to reach your goal? Now assume that you want income of $50,000 in real terms when you retire, and that your current income grows to keep pace with inflation, what fraction of your income do you need to save if inflation is 2.5%?

2. Company A has revenues of 12,000; expenses of 6,000; depreciation of 2,000, and faces a 30% tax rate. What is the cash flow from operations this year? Show these cash flows in three different ways.